In This Article:
While LION E-Mobility AG (ETR:LMIA) might not have the largest market cap around , it received a lot of attention from a substantial price increase on the XTRA over the last few months. While good news for shareholders, the company has traded much higher in the past year. As a small cap stock, hardly covered by any analysts, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let’s examine LION E-Mobility’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
Check out our latest analysis for LION E-Mobility
What's The Opportunity In LION E-Mobility?
The stock is currently trading at €0.71 on the share market, which means it is overvalued by 33% compared to our intrinsic value of €0.54. This means that the opportunity to buy LION E-Mobility at a good price has disappeared! If you like the stock, you may want to keep an eye out for a potential price decline in the future. Given that LION E-Mobility’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
What kind of growth will LION E-Mobility generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 26% over the next couple of years, the future seems bright for LION E-Mobility. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What This Means For You
Are you a shareholder? It seems like the market has well and truly priced in LMIA’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe LMIA should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on LMIA for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for LMIA, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.